Deputy Susie Pinel says that she would like to see proposals for the changes tabled in time for a States debate this autumn.
She believes the move could help those whose income has fallen during the Covid-19 crisis as people would be able to delay paying their previous-year liability contributions until ‘it is right for them’.
She stressed, however, that there were no plans to waive any tax as happened in Guernsey when the island moved to a pay-as-you-earn regime, but said no one would have to pay two years’ liability in a 12-month period.
In response to the announcement, Senator Kristina Moore urged the Treasury to communicate the proposed changes clearly and to give as much certainty as possible to taxpayers so that they could manage their finances.
Deputy Pinel explained that a freezing of liabilities of the previous year to allow the transition would assist people who had seen their incomes reduced because of the economic shock of coronavirus.
Under the current rules, around 62% of taxpayers, who started paying tax before 2006, pay their income tax on their previous year’s earnings.
Islanders can currently volunteer to pay their tax on same-year earnings, and everyone registered since the introduction of the Income Tax Instalment System on 1 January 2006 already pays in this manner.
Deputy Pinel said that the decision to press ahead with introducing universal current-year taxation had been ‘accelerated’ by the Covid-19 crisis.
‘In the current situation it is obviously difficult for a lot of people whose incomes will have fallen. They will be paying tax for 2019 rather than for 2020,’ she said.
‘What we would like is for everybody to become current-year taxpayers by 2021. It is a very complex subject, but we would like to table a proposition for debate in the autumn for this, along with the proposals for independent taxation.
‘It also would require a change to the finance law.’
She added that those who moved from paying on prior year to current year income would not be exempted from any outstanding tax liabilities.
‘We won’t give a tax holiday like they did in Guernsey because we think that is unfair. Everyone will ultimately pay their tax,’ she said.
‘What we can do is arrange for tax to be frozen and paid later. People can pay it off when it is right for them.’
Senator Moore raised concerns in the States this week after learning that a number of Islanders on the prior-year taxation model had received letters requesting that they settle their liabilities before universal current-year taxation was introduced.
‘I think that most people would support moving to current-year taxation to help people in the current circumstances,’ Senator Moore said.
‘But if they are are going to have to freeze tax payments, the question is how are they going to get that back? Will it be incremental? And to add this kind of uncertainty into the mix at this time is not very helpful.
‘Again it is a communication issue. What we really need is clarity from the government. I do not think people have really got what the message was before these letters were sent out.’
She added that she had recently asked Comptroller of Revenue Richard Summersgill to confirm that a move to universal current-year taxation was being looked at.
‘I received an answer from Richard Summersgill on this and he said that officers are still working on moving to current-year taxation,’ she said.
‘He said what they don’t want to do is for people to have to pay two years’ tax in one year.’
